AP (accounts payable)

Accounts Payable (AP) is a financial term that refers to the money a company owes to its suppliers or vendors for goods and services purchased on credit. It represents a company's short-term liabilities and is important for managing cash flow. When a business receives an invoice from a supplier, it records this amount in accounts payable. The company is then obligated to pay the invoice by the due date. Proper management of accounts payable ensures that a business maintains good relationships with suppliers and avoids late fees, which can impact its financial health.